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Within the region’s manufacturing industries, various types of food products manufacturing play an important role.
Upper East Texas’ fruit and vegetable, dairy, meat and bakery production industries employed more than 9,200 people and paid more than $300 million in wages in 2007. These industries employed more than 68,000 in Texas, and paid annual wages in excess of $2 billion. Regional employment in these four industries makes up about 14 percent of the statewide total.14
Exhibit 8 shows where these industries operate in the Upper East Texas region.
An analysis of location quotients indicates that the region has a comparative advantage in two of these four food production industries. Fruit and vegetable food manufacturing (with a location quotient of 1.14 in 2007) and animal slaughtering and processing (1.31 in 2007) have a higher concentration of employment than the state share in these industries. In other words, because the regional share of employment for these industries is greater than the state share, these industries are net exporters of these manufactured goods.
Of the four industrial groups listed above, animal slaughtering and processing was by far the region’s largest employer. In 2007, the industry employed nearly 6,900 people in the region and paid more than $200 million in wages.
Upper East Texas Food Products Manufacturing, 2007
While still employing a significant number of people in the region, the dairy products industries had the lowest employment, with about 500 positions and $19 million in wages in 2007.
Sara Lee Bakery Group, which produces bread and other bakery products, has operations in Paris, Texas. The Paris location generated more than $100 million in sales in 2007 and employs more than 500 people. Campbell’s Soup, J&M Poultry, Tyson Poultry, Keller’s Creamery and John Soules Inc. all have presences in the region as well, employing more than 1,300 and generating in excess of $760 million in annual sales.15
Pilgrim’s Pride, a food products manufacturer, has been headquartered in Pittsburg, Texas since 1946 and its operations are deeply rooted in the Upper East Texas region. Today, Pilgrim’s Pride is the largest poultry producer in the nation.16 During fiscal 2007, the company employed about 55,000 and generated total sales of $7.6 billion. In Mount Pleasant, Texas, site of one of the nation’s largest prepared-foods plants, Pilgrim’s Pride can produce 2,000 different products and more than 7 million pounds of finished goods per week. Globally, the company exports to more than 80 countries and annually processes about 9 billion pounds of poultry.17
The Upper East Texas region is not immune to rising energy and feed prices. According to the U.S. Department of Agriculture’s Economic Research Service, beef and poultry prices have risen from May of last year by 1.5 and 4.5 percent, respectively. Both increases are attributed to higher feed and energy prices. Increasing costs for these two major factors of production (feedstock and energy) have affected meat production employers and their profit margins. Several have scaled back on production to offset higher costs and others have considered changes in their operations. For example, Pilgrim’s Pride CEO recently explained that due to “unprecedented challenges,” the company is going to review all production facilities to ensure optimal efficiency.18